Natural gas futures fell for the first time in four days on speculation supplies of the industrial fuel will be ample to meet demand.
The Energy Department may say on April 29 that stockpiles advanced 71 billion cubic feet last week, based on the median of six analyst estimates compiled by Bloomberg. The five-year average increase for the week is 66 billion. U.S. gas stockpiles were 19 percent above the average in the week ended April 16, the Department said last week.
“We are very well supplied and I don’t think there is a lot of demand out there,” said Michael Rose, director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida. “We’ve seen three days of gains and a pullback can be healthy for the market.”
Natural gas for May delivery fell 4.6 cents, or 1.1 percent, to settle at $4.216 per million British thermal units on the New York Mercantile Exchange. Natural gas futures have dropped 24 percent this year.
May futures expire tomorrow. The more actively traded June futures contract declined 3.6 cents, or 0.8 percent, to $4.315 per million Btu.
Gas demand for power generation may rise next week as warm weather boosts the use of air conditioners, said Chris Kostas, an analyst with Energy Security Analysis Inc. in Wakefield, Massachusetts.
Temperatures in the East Coast are “expected to turn very warm” from May 2 through May 6, according to MDA Federal Inc.’s EarthSat Energy Weather, based in Rockville, Maryland.
Washington will have a high of 90 degrees Fahrenheit (32 Celsius) on May 2 and 88 on May 3, according to EarthSat. New York will reach a high of 84 on May 2.
A “much warmer” summer is on the way for much of the nation compared with last year, according to AccuWeather Inc., based in State College, Pennsylvania.
Natural gas gained 7.8 percent in the past three trading days. It rose to $4.322 on April 23, the highest intraday price since April 6, after data showed the number of gas drilling rigs in U.S. fell for the first time this year.
The rig total declined 17 to 956 last week, the first decline since Dec. 25, according to Baker Hughes Inc. The total was up 44 percent from a seven-year low reached in July.
“It takes months for a drilling rig to produce gas, and despite last week’s decline, the rigs we’ve seen over the past few months are going to create a lot of gas,” Kostas said. “Supplies are robust and will remain robust.”
Gas prices will average $5.25 per thousand cubic feet this year, Irene Hass, a Houston-based analyst at Canaccord Adams Inc., said in a report today. That’s 75 cents lower than her earlier forecasts. Prices in 2011 will average $5.75.
“The mild weather in the last several weeks of the heating season, and the resulting 100 bcf of additional gas in storage, was our tipping point on gas price expectations for 2010,” Haas said in the report.
Gas inventories in the week ended April 16 rose 73 billion cubic feet, more than double the five-year average increase, to 1.829 trillion. That’s 95 billion cubic feet higher than the level a year ago, according to the Energy Department.
Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, fell 5.15 cents, or 1.2 percent, to $4.1753 per million Btu, according to data compiled by Bloomberg.
Gas futures volume in electronic trading on the Nymex was 179,872 contracts as of 2:53 p.m., compared with a three-month daily average total of 235,000. Volume was 209,025 yesterday. Open interest was 843,344 contracts, compared with the three-month average of 826,000. The exchange has a one-business-day delay in reporting open interest and full volume data.
Moming Zhou in New York at +1-212-617-8956 or Mzhou29@bloomberg.net